Paladin Africa Limited, the operator of Malawi’s largest mine, Kayelekera Uranium Mine in Karonga, will retrench 100 national employees in a bid to reduce operating costs.

Despite record production and sales in the last quarter, ending 31 December 2012, the world market price of uranium has remained low and the company continues to operate at a loss, according to Greg Walker, International Affairs General Manager.

Besides retrenchment, the company is seeking further cost reduction measures, including nano-filtration that will ensure more efficient use of acid in production and switching over from the costly on-site diesel generators to the national electricity grid. These two projects, to reduce costs by USD 5-8 per pound of uranium oxide, are likely to be completed by late 2013, at the earliest.

Joyce Banda may have known about the looming retrenchment when she said, during a speech at the recent launch of the World Bank and European Union financed Mining Governance and Growth Support Project, that she has been praying that the world prices of uranium increase.

John Borshoff, the Managing Director of Paladin Energy, does not seem to be faring badly despite the low uranium price. He collected AUD 5.6 million (approx. USD 5.8 million) for the sale of shares and AUD 1,717,000 (approx. 1,790,000) in annual leave entitlements at the end of 2012.

Regardless of Borshoff’s large take home package in 2012, larger than 2011, the Malawian and expatriates are a cost Paladin currently cannot afford, according to the retrenchment statement.

Part of the statement from 24 January 2013 reads

Despite achieving its best production results to-date in the December Quarter, when KM [Kayelekera Mine] produced 772,280lb of uranium oxide, PAL [Paladin Africa Limited] continues to operate at a loss, as it has done since the commencement of production in July 2010. The company has been able to remain in operation only due to continued financial support provided by the parent company, Paladin Energy Limited.

Expatriate positions are also being reduced by 24 percent from 118 to 90. The company has advised the Ministry of Labour of this move; informed the KM Local Staff Association (LSA), which represents national employees, and notified its workforce.

PAL has also engaged the services of a Malawian company which specializes in providing advice and counseling to affected employees. The company will consider retrenched employees for re-employment if redundant positions are ever re-established at KM. Any other arising vacancies need to be filled on the basis of skills suitability and these employees will be considered - if they apply for other positions - on the basis of their suitability and against that of other candidates who may apply at that time.

Update 28 January 2013: There has not been much backlash over the retrenchments although one blogger, Chimwemwe Msuku, blogged that he has observed a lack of technical and other training for Malawians so that they can assume positions currently held by foreign workers,

I am saddened by the news that Kayelekela [sic] Uranium Mine which is owned by Paladin is laying off staff. More than 75% of those being laid off are local Malawians.

I find it intriguing that Paladin is retrenching more locals than its expatriate staff. While a Malawian is receiving for example MK200,000 per month as a Technician, his foreign counterpart who has the same qualifications as him/her receives the equivalent of about MK2,000,000 in US dollars. These are not exact figures.

Is it true that five or so years since the mine was opened, no Malawian has gained enough experience or has been trained to safely and competently run mining operations at Kayelekela [sic]?

Update 1 February 2013: Today, the Malawi Voice reported on an interview with one of the workers who has been laid off. The man who did not want to be named said,

We queried on why the management is firing only Malawian workers when many foreigners are doing easy jobs in administration, accounts, human resources, supply chains and other in production. They are draining the company’s resources in all aspects which include remunerations in dollars and their up keep on top of air tickets. But this did not hold water.

In one case, a Radiation Safety Officer, who was even instrumental in training some expatriate, has been dismissed, leaving behind his foreign students. We just wonder what our own government is doing.

It is mostly foreigners that have benefited from the operations at the mine since inception.

We have seen Kamuzu Chibambo complaining about this recently in press conferences but there has been little action from government. The workers have complained about all this to government but in the end all suspected collaborators have been dismissed. This is the last straw that has broken the backs of local workers considering the fact that life is already tough in Malawi. The dismissed workers have only been dismissed with a one month salary paid in advance. This clearly is an insult to the nation.